From Briefing.com: Weekly Recap - Week ending 06-Aug-10
Fannie Mae (FNMA/OTC) reported a net loss of $1.2 billion in the second quarter of 2010, compared to a net loss of $11.5 billion in the first quarter of the year. Net revenue was $4.5 billion in the second quarter of 2010, up 49 percent from $3.0 billion in the first quarter of 2010, due primarily to an increase in net interest income. Credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, were $4.9 billion, down from $11.9 billion in the first quarter of 2010. The company expects its financial results will continue to be negatively affected by losses primarily on a subset of loans it acquired between 2005 and 2008.
The company expects that its credit-related expenses will remain high in 2010. However, the company expects that, if current trends continue, its credit-related expenses will be lower in 2010 than in 2009. Net fair value gains were $303 million in the second quarter, compared to losses of $1.7 billion in the first quarter of 2010, due primarily to lower fair value losses on the company's derivatives, which were partially offset by lower fair value gains on its trading securities. During the quarter, loans from Fannie Mae's 2009- 2010 book of business continued to perform solidly while credit-related expenses on the overall book of business decreased by more than $7 billion. Beginning in 2008, Fannie Mae raised its underwriting standards and sharply reduced its acquisitions of higher-risk loans to support sustainable homeownership. The impact of these changes is shown in the 2009 and 2010 vintages of Fannie Mae's single-family loans, which have the lowest early serious delinquency rates of any loans the company has acquired in the last 10 years. The company currently anticipates that these loans will be profitable.
Credit Losses: Almost all of the company's realized credit losses in 2009 and 2010 on single-family loans are attributable to single-family loans that it purchased or guaranteed from 2005 through 2008. While these loans will give rise to additional credit losses that it has not yet realized, the company estimates that it has reserved for the substantial majority of these losses... Housing Forecast: The company expects home prices to decline slightly for the balance of 2010 and into 2011 before stabilizing, and that home sales will be basically flat for all of 2010. Residential mortgage debt outstanding is expected to decline for the third year in a row.
Providing Liquidity: During the first half of 2010, the company purchased or guaranteed an estimated $423 billion in loans, which includes approximately $170 billion in delinquent loans the company purchased from its single-family mortgage-backed securities trusts. Fannie Mae remained the largest single issuer of mortgage-related securities in the secondary market during the second quarter, with an estimated market share of new single-family mortgage-related securities of 39.1 percent, compared with 40.7 percent in the first quarter of 2010.
09:44 am Payrolls Drop More than Expected, but Earnings Point To Stable Consumption
The employment report from July revealed more of the same. Firms are still reluctant to increase their labor needs and the economic recovery remains in a sluggish - but upward moving - path.
Before looking at the payroll numbers, it is important to note that both hours worked and hourly earnings increased in July. The 0.5% weekly earnings growth will drive consumption higher and help offset the effects of the second consecutive month of triple-digit layoffs.
Total payrolls shrank by 131,000 in July after falling a negatively revised 221,000 in June. The Briefing.com consensus expected a payroll decline of -87,000.
The drop in payrolls can be mostly attributed to 143,000 temporary census workers completing assignments. The rest of the government sector shed an additional 59,000 jobs, which was in-line with earlier reports of state and local government layoffs required by budgetary cuts.
The private sector added 71,000 jobs in July, which was slightly less than the 83,000 expected by the consensus. June's private payrolls were revised down from 83,000 to 31,000 and were more in-line with the 13,000 predicted by last month's ADP report.
The details of the payroll data do reveal a stable service-providing sector and a slightly growing goods-producing sector. Manufacturing payrolls rose by 36,000 in July, almost three times as many workers as June. The construction industry lost another 11,000 jobs, but 10,000 of those were attributed to strike activity.
The unemployment rate remained at 9.5%, but that figure is misleading. The rate only held steady because the labor force participation rate continued its downward move. The lack of steady labor force participation is a stark reminder that the unemployed are losing faith in the economic recovery.
If the number of workers in the labor force held at June's level, the unemployment rate would have risen to the consensus expectation of 9.6%.
4:16PM Kulicke & Soffa's CEO Will Retire on 9/30/2010; Bruno Guilmart is appointed New President and CEO (KLIC) 6.79 -0.82 :
4:14PM Hewlett-Packard issues preliminary Q3 EPS above prior guidance; sees Q4 EPS, revs in-line; raises FY10 EPS and rev guidance above consensus (HPQ) 46.30 -0.05 : Co issues upside guidance for Q3 (Jul), sees EPS of ~$1.08 vs. $1.07 Thomson Reuters consensus and guidance of $1.05-1.07. Co issues in-line guidance for Q4 (Oct), sees EPS of $1.25-1.27 vs. $1.26 Thomson Reuters consensus; sees Q4 (Oct) revs of $32.5-32.7 bln vs. $32.63 bln Thomson Reuters consensus. Co raises guidance for FY10 (Oct), sees EPS of $4.49-4.51 vs. $4.49 Thomson Reuters consensus, up from $4.45-4.50 previously; sees FY10 (Oct) revs of $125.3-125.5 bln vs. $124.52 bln Thomson Reuters consensus, up from $123.7-124.9 bln previously.
4:08PM Lattice Semi announces resignation of CEO effective September 4; appoints Christopher Fanning as Interim CEO (LSCC) 5.43 +0.09 : Co announces that Bruno Guilmart has resigned as President and CEO effective September 4, 2010 to pursue other opportunities. Mr. Guilmart is also resigning as a director and tendered his resignation on August 5, 2010. The Board has appointed Christopher M. Fanning as interim Chief Executive Officer, also effective September 4, 2010. Mr. Fanning currently serves as Lattice's Corporate Vice President and General Manager, Low Density & Mixed Signal Solutions.
4:06PM Hewlett-Packard CEO Mark Hurd resigns; CFO Cathie Lesjak appointed interim CEO (HPQ) 45.50 -0.86 : Co announced that Chairman, Chief Executive Officer and President Mark Hurd has decided with the Board of Directors to resign his positions effective immediately. The Board has appointed CFO Cathie Lesjak, 51, as CEO on an interim basis. Lesjak is a 24-year veteran of the company who has served as HP's CFO and as a member of the company's Executive Council since January 2007. She oversees all company financial matters and will retain her CFO responsibilities during the interim period. Hurd's decision was made following an investigation by outside legal counsel and the General Counsel's Office, overseen by the Board, of the facts and circumstances surrounding a claim of sexual harassment against Hurd and HP by a former contractor to HP. The investigation determined there was no violation of HP's sexual harassment policy, but did find violations of HP's Standards of Business Conduct. Lesjak has taken herself out of consideration as the permanent CEO but will serve as interim CEO until the selection process is complete. The selection of a new chairman will occur in conjunction with the CEO decision. (Stock is halted)
7:47AM Microchip earnings correction: Beats by $0.04; guides Q2 rev and EPS above consensus (MCHP) 30.76 : Last night we compared MCHP's Q1 GAAP results to the non-GAAP consensus. The co reported Q2 non-GAAP EPS of $0.55, $0.04 better then the $0.51 consensus. Co also isssued upside Q2 guidance; co sees Q2 non-GAAP EPS of ~$0.58 vs the $0.52 consensus, with rev of $340-343 mln vs the $329 mln consensus... the prior comment has been removed.
7:22AM Advanced Micro's ATI Radeon Graphics Solutions to power Apple's (AAPL) new iMac and Mac Pro (AMD) 7.50 : |
